Wansley Enterprises Is Considering a New Project

question 20

Multiple Choice

Wansley Enterprises is considering a new project.The company has a beta of 1.0, and its sales and profits are positively correlated with the overall economy.The company estimates that the proposed new project would have a higher standard deviation and coefficient of variation than an average company project.Also, the new project's sales would be countercyclical in the sense that they would be high when the overall economy is down and low when the overall economy is strong.On the basis of this information, which of the following statements is CORRECT?

• A) The proposed new project would increase the firm's corporate risk.
• B) The proposed new project would increase the firm's market risk.
• C) The proposed new project would not affect the firm's risk at all.
• D) The proposed new project would have less stand-alone risk than the firm's typical project.
• E) The proposed new project would have more stand-alone risk than the firm's typical project.

---

Definitions:

Remaining Employees

The employees who continue to work for an organization after others have left, often after layoffs or voluntary departures.

Internship Positions

Opportunities for individuals, often students or recent graduates, to gain practical experience in their field of interest, typically for a determined period.

Hiring Process

The series of steps undertaken by an organization to recruit and select candidates for job positions, from job posting to final selection.

Claims

Assertions or statements made, usually in writing, that something is the case, often requiring proof or evidence.